Protecting Your Family And Your Assets

Adding Children to Title of a Minneapolis Home

Putting Your Children on Title to Real Estate: Multiple Decision Makers

After parents transfer their home to their children or another person, they no longer own it. Even if the children agree that the parents can continue living there, the children have the right to decide on repairs and improvements to the property, or even to sell it. Even if the parents continue to own the property and just add a child as a tenant in common, joint tenant or remainderman, they no longer own it alone and do not have the sole right to make decisions about it.

• Each tenant in common or joint tenant has an equal right to possession of the property and an equal obligation to pay expenses. This can become an issue if more than one person wants to live in the house. A more common problem is if one or more of the owners cannot afford to pay for regular expenses or needed maintenance. Multiple owners may disagree on whether to do the work on the house or pay someone else to do it, such as mowing the lawn or shoveling snow.

• Each owner has a right to sell or transfer their share of the property to anyone they choose, so you could end up with strangers owning the property. For example if a co-owner gets into financial difficulty and needs more money, he may want to sell his share of the property. If the other owners don’t want to or can’t afford to buy him out, the owner needing the money can sell his undivided share in the property to someone else outside the family.

Things to do When Adding Children to the Title

• If the original owner wants to sell or mortgage the entire property, he must have the consent of all other owners. All owners must sign a mortgage or a deed conveying the property to a buyer.

• The owner also needs the consent of the spouses of all owners, even if the spouse is not on title, because Minnesota law protects real estate rights of all spouses. Thus the deed must be signed by all spouses of owners as well as the owners. Minn. Stat. §507.01.

• The owner can’t just change her mind and get the property back without the consent of the other owners and their spouses. A deed is not revocable, and a new deed transferring title back to the original owner would have to be signed by all of the owners and their spouses.

• If a co-owner gets divorced, the ex-spouse may receive rights to the property in the divorce proceeding. A gift to a married child is more likely to be treated as a marital asset in a divorce than if the child receives it as an inheritance when the parent dies.

Different Scenarios When Adding Children to the Title

• If a creditor of any co-owner obtains a judgment against that co-owner, the judgment becomes a lien against the property and must be paid when the property it sold. Minn. Stat. 548.09. If any co-owner owes taxes, a tax lien could be filed against the property. All liens must be paid off when property is sold so that the buyer gets clear title to the property purchased.

• If a co-owner files bankruptcy and the property is not that person’s homestead, it will not be exempt from creditor’s claims. This would severely impact the other co-owners’ ownership rights including their ability to sell or mortgage the property. After parents transfer their home to their children or another person, they no longer own it. Even if the children agree that the parents can continue living there, the children have the right to decide on repairs and improvements to the property, or even to sell it. Even if the parents continue to own the property and just add a child as a tenant in common, joint tenant or remainderman, they no longer own it alone and do not have the sole right to make decisions about it.

• If the owner has a mortgage on the house and it has a due on sale clause (most do), the lender has the right to make the owner pay the loan in full if title is transferred without its permission. However, in the current economy, lenders are not likely to complain as long as the mortgage payments are current.

• The more children added to the title, the more complicated it gets because there are more decision makers, more spouses, more financial situations to consider, and more potential creditors.

• If multiple owners cannot agree and action must be taken, one owner may bring a court action for partition, which asks the court to split the property into two or more shares for the owners, or if that is not possible, to require the property to be sold. Minn. Stat. §558.01. This is very expensive and probably not what the parents want.

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